When Amazon this month said that it would start offering same-day delivery for free, it seemed to make perfect sense. If you've got a new service that customers are reluctant to try, making it free is a good come-on.
The problem is the extensive restrictions on the service — for starters, it applies to a tiny segment of Amazon customers within a handful of markets — and the fact that those restrictions conflict with the scenarios where someone would want to use the service. As an example: You're packing for an important overseas trip and suddenly realize you don't have enough containers for liquids or you have the wrong power converter. If Amazon's same-day Amazon delivery service could keep you from having to drive to a store, that would be terrific.
But chances are it won't. The service is being offered in only 14 metro areas. The order must be for more than $35. Those aren't unreasonable conditions, but here's the killer: Orders need to be placed by noon, and to count as same-day, the delivery can be as late as 9 p.m. I don't usually prep for such trips in the morning, so noon is a problem. And if I do prep in the morning, it's because I have an early-evening flight, so 9 p.m. is a problem. Same-day delivery is logistically problematic on its own, but with those limitations, it's hard to see the point. If you can wait until 9 p.m., you will likely be able to wait for a morning delivery, too.
Also, the dirty not-so-secret secret about Prime's free shipping is that it's far from a guarantee. It's more like a lottery. I've been a Prime customer at Amazon for a long time and I assure you that I have paid for plenty of Amazon shipping. Amazon's ability to sell to you an extremely large number of products is because of a huge — and growing — number of small sellers in the service. Most of those sellers are not bound by the Prime free-delivery offer.
Lots of products are offered with free shipping, but an increasing number are not. That fact has started to erode the Prime value, in the same way that these restrictions are going to unnecessarily tarnish same-day delivery.
Another recent Amazon program does, however, get this balance much better. On May 21, Amazon announced one-hour delivery from local stores. More specifically, the service promises that "two-hour delivery from local stores is free and one-hour delivery, available in select zip codes, is $7.99. Prime Now is currently available in Atlanta, Austin, Baltimore, Brooklyn, Dallas, Manhattan and Miami."
Here's the most telling quote from Amazon's statement: "'So whether you’re ordering diapers and a big-screen television from Amazon, fresh produce from D’Agostino, a chef-made prepared meal from Gourmet Garage or cupcakes from Billy’s Bakery, we will get all of the items right to your door in lightning-fast speeds,' said Dave Clark, Amazon’s senior vice president of worldwide operations."
Amazon is playing a bit fast-and-loose with delivery times. We'll get to that in a moment. When trying to replace next-day delivery with same-day, it's critical to remember why a shopper might want/need that speed. Other than needing to catch a flight, it might be on Christmas morning when you realize that a key toy component wasn't included or something breaks just a few hours before you need to use it.
Is there a need for a much faster than overnight service? Yes. Will customers who find themselves in those unfortunate predicaments be willing to fork over serious dollars? Quite possibly. Can an operation like Amazon do so profitably? There's the rub, where we see how far Amazon can push its many new local distribution centers, as well as potentially those flying drones.
But with the severe hours limitations — along with tortoise-like delivery promises — the benefits are suspect and most consumers will simply wait until the morning (given that they will likely have to anyway). One-hour local delivery, however, could potentially address shopper needs.
There are still huge limitations: Will these stores be open — and delivering — during the hours such a service would be needed the most? (Late at night, holidays, etc.) Will they be able to deliver enough of Amazon's massive product offerings to be useful? Will these geographies be able to grow to cover more than a tiny fraction of the U.S. population?
Back to that fast-and-loose quote attributed to Dave Clark. In a release that is focusing on one-hour delivery, he sneaks in a reference to diapers and "big-screen television" and marries it to "lightning-fast speeds." Is he referencing same-day or one-hour? That's key. If big-screen TVs and diapers — especially diapers — were in the one-hour program, that's great. Otherwise, not so sure overnight won't suffice. (By the way, can't think of too many situations where I need a big-screen TV in a few hours and can't wait for overnight delivery. Even if my set died in the morning and I have 30 guests coming over to watch the big game this afternoon, the unpacking and installation alone pretty much means I won't make it in time.)
I have to applaud Amazon for focusing on logistics and trying to better local stores at their own game. But between time bait-and-switch and ludicrous limitations, looks like what Amazon gains in ideas is being lost in deployment.
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